Category: Food and Drink
Why do the servers always want to take our cutlery and plates and glasses away?
I have noticed repeatedly, over the course of many restaurant visits, that my servers want to take away my plates, my glasses, my cutlery, and indeed almost anything else — before I really want to give it up.
The ratio of “they want to take it away too soon” to “they take it away too late” seems to me at least five to one.
Those who know me would not describe me as a lingerer over meals, or a very slow eater. So I do not view this phenomenon as merely my peculiarity, rather the servers often want to take my things away before I am done with them.
In many restaurants the servers seem to put more energy into keeping your table clean than in taking your order promptly in the first place.
How should we model this behavior?
One possibility is that the servers know they will be busier yet later on, so they want to get some of the work out of the way now. Surely that holds in many cases, but still I observe this “server grabbing behavior” in a wide variety of circumstances, including in near-empty restaurants.
Could it be that the restaurant managers give these instructions, hoping it will induce the diners to order further dishes and spend more money?
Another possibility is that the servers feel the need to signal that they are always busy, rather than standing around and looking idle. I can imagine that hypothesis having some truth, but it doesn’t explain the entirety of what I observe.
The most plausible general explanation is that the restaurant managers favor a more rapid turnover of tables than the customers do, and regular plate- and glass-clearing helps to achieve that end. It also creates another “point of contact,” giving the customer the opportunity to ask for the check. Still, you might think ex ante competition to attract diners would moderate this practice more than it does.
I have asked both current and former servers why there is so much emphasis on place-clearing, and usually I receive circular answers, such as “We want to make sure your plates and glasses are cleared away when you are done with them.”
So what is the best way of thinking about this practice?
Why Top CEOs Earn Big Paychecks
CEO compensation at large firms is high, especially in comparison to average worker wages, sparking debates over income inequality. Critics argue that such pay packages are unfair and disproportionate to actual company performance. Proponents contend that high pay reflects productivity and is necessary to attract scarce top talent to large firms. Let’s go to the ticker tape.
On August 12 shares of Starbucks were selling for about $77, a level they had been stable at for some time. On August 13, shares were selling for $94. What changed? On August 13, Starbucks announced that they were hiring a new CEO, Brian Niccol, who had held the top position at Chipotle.
There are some 1,132,800,000 Starbucks share outstanding so hiring Niccol instantly increased the value of Starbucks by just over $19 billion. In comparison, Niccol will be paid $1.6 million in salary, a bonus payment of $10 million and potential equity incentives that could be worth on the order 
of $100 million or more if the stock continues to do well.
No question, Niccol is paid handsomely but it’s only a small percentage of the billions the market estimates he will create for other people, both consumers and investors.
Niccol has had a phenomenal streak as CEO of Chipotle raising the stock price from about $6 to $56. Thus, it wasn’t surprising that on the announcement of his move, Chipotle stock plunged from $56 to $46 (later recovering to around $52).
Using the latter number, the value of Chipotle fell by about $5.5 billion on the day of the Niccol announcement. That’s a remarkable fall given that the number two at Chipotle is probably no slouch. But heh, Kevin Durant doesn’t make quite as much as Steph Curry. (See yesterday’s post on the benefits of inequality!) Last year, Chipotle paid Niccol a total compensation package worth about $22.5 million. Again, a nice pay package but is there any question that Chipotle investors are sorry to see Niccol go?
Note also that the market expects Niccol to raise the value of Starbucks going forward more than he would have raised the value of Chipotle going forward so this move was a net gain for society. It’s important to remember that CEO pay is not just about incentives it’s about allocation.
Bottom line is that in the estimation of people who put their money where there mouth is, Niccol is worth the pay.
Addendum: Don’t forget my previous post in this series from 2013, The Value of a CEO looking at what happened when Ballmer exited Microsoft. Same basic lesson but in reverse! N.B. look at what has happened to Microsoft stock since!
All of this should also be put in the context of the Extreme Shortage of High-IQ Workers which one can also understand as the shortage of talent.
Rampell On Harris’s Economic Policy
Here is the Washington Post’s Catherine Rampell on Harris’s price control policy:
It’s hard to exaggerate how bad this policy is. It is, in all but name, a sweeping set of government-enforced price controls across every industry, not only food. Supply and demand would no longer determine prices or profit levels. Some far-off Washington bureaucrats would. The FTC would be able to tell, say, a Kroger in Ohio the acceptable price it can charge for milk.
…If your opponent claims you’re a “communist,” maybe don’t start with an economic agenda that can (accurately) be labeled as federal price controls.
And here is a primer on Nixon’s price controls announced 53 years ago yesterday. Read Modern Principles for more.
Sam Mendelsohn’s Travel Blog
When I travel abroad, I will often get recommendations of where to eat, what to do and what to read and watch from Sam Mendelsohn. Not just a few sentences, as if from a travel guide, but pages of unique and original material. I often have time to pick only one or two recommended items but invariably they are excellent. When I stayed in the Devigarh palace outside of Udaipur, for example, Sam pointed me to the movie Eklavya: The Royal Guard which is set in the palace. Watching the movie added to the stay. Not your usual material.
Sam is now formalizing his notes into a travel blog. He’s starting with some of lesser known places in India but will soon add more. He is also an expert on Thailand. Email him for some out-of-the-ordinary tips.
Every place is its own distinctive world: some combination of intellectual, literary, culinary, musical, sonic, linguistic, spiritual, philosophical, visual, architectural, geographic, botanic, olfactory, and cinematic worlds, and etc, brought together by different cultural and historical currents, and that’s all only a small part of the story of any given place. That such worlds of worlds actually exist, and the planet is full of them, seems underappreciated. Few people have the time or background knowledge to give anything more than a very superficial exploration of any of these while traveling, and I won’t claim to either. Despite my ambitions, I’m quite mediocre. Nonetheless, attempting to get lost in these worlds, however briefly and incompletely, is incredibly stimulating and meaningful for me. I like cities more than most people because they contain more worlds to get lost in, but on a short trip less can be more.
Houston France markets in everything
Houston First, the city’s tourism department, revealed that it is paying $90,000 per year for three years — meaning the city will invest a whopping $270,000 to have the Michelin Guide here in Houston. Holly Clapham-Rosenow, Houston First’s chief marketing officer, says the city redirected some of its budget from various departments to the guide, which is standard for opportunities that come about during the year or when business strategies shift. “Budgets have some fluidity if the right opportunities come about, and opportunities like Michelin, Top Chef, and James Beard — we’re going to jump on them,” she says, adding that the investment seemed worth it considering the culinary scene is one of Houston’s biggest traveler draws.
According to Houston First’s 2023 Strategic and Budget Summary, money spent on food and beverage accounts for around 32 percent of the money spent during day trips to Houston and 24 percent of the money spent during overnight trips — the highest cost behind lodging.
Here is the full story, via the excellent Samir Varma.
El Salvador notes
Here are a few observations from the trip:
1. El Salvador does truly seem safe, arguably “Canada safe” or maybe safer yet.
2. Hardly ever have I had quicker and more convenient airport and entry procedures.
3. Hardly any tourists are there, unless you count returning El Salvadorans from the United States.
4. For a small country, always visit the #2 city, in this case Santa Ana. There is nothing to do there, but that is part of the point. You can stroll through the local Walmart.
5. Mostly you should eat pupusas in less formal settings. The basic corn, beans, and cheese products of the country are excellent, though they get worse the nicer the restaurant.
6. There is one exception to #5: go eat at El XoLo, it is one of the best meals I have had in years. The squash dishes and the cochinita were best, and you get a fun look at the El Salvadoran elite.
7. You can go to lovely ocean spots and no one will be there.
8. I visited the colonial city of Suchitoto again, after a nine (?) year absence. It had perhaps 10x the amount of commerce as last time.
9. El Rosario, the brutalist church, is one of the great landmarks of the New World.
10. The gifted Chinese library in San Salvador is hilarious, here is some photos.
11. Measured gdp growth in El Salvador is a disappointment. But consumption seems to be growing rapidly, both in the numbers and what one sees on the ground. Which series matters more? This is a common paradox in development economics.
12. Taking 3-4 day trips in groups of five or six is very much underrated. Hope you can organize your own outings!
13. People love it when you tell them you are from Virginia.
14. I may consider “future of safety” issues in more detail in a later post.
15. Overall, I would encourage you to go, go, go. From Washington, D.C. it is a simple, direct four hour flight — isn’t that closer than Denver? What are you waiting for?
Operation Warp Speed for Cows
The UK Health Security Agency has raised their pandemic threat level for H5N1 bird flu from a 3 to a 4 on a 6 point scale.
My takeaway is that we have completely failed to stem the outbreak in cattle, there has been animal to human transmission which we are surely undercounting, but so far the virus has not mutated in a way to make it very adaptable to humans.
The failure to stem the outbreak in cattle is concerning because it suggests we would not be able to stem a human outbreak. We can easily test, quarantine and cull cattle!
It is absolutely outrageous that dairy farmers are refusing to cooperate on testing:
To date dairy farmers have, in large measure, refused to cooperate with efforts to chart how deeply the virus has infiltrated U.S. herds, seeing the possible stigma of admitting they have H5N1-infected cows as a greater risk than the virus itself.
We should be testing at much higher rates and quarantining and culling. The dairy farmers should be and are being compensated but frankly the farmers should have no say in the matter of testing. Externalities! Preventing a pandemic is much cheaper both in resources and in restrictions on liberty than dealing with one.
And how about an Operation Warp Speed for a vaccine for cows? Vaccinate. Vacca! It’s right there in the name! If only we could come up with a clever acronym for an Operation Warp Speed for COWS.
Developing a vaccine for cows would also speed up a human vaccine if one were needed.
Here are some key points from the UK HSA:
There is ongoing transmission of influenza A(H5N1) in the US, primarily through dairy cattle but with multispecies involvement including poultry, wild birds, other mammals (cats, rodents, wild mammals) and humans (1, 2). There is high uncertainty regarding the trajectory of the outbreak and there is no apparent reduction in transmission in response to the biosecurity measures that have been introduced to date. There is ongoing debate about whether the current outbreak should be described as sustained transmission given that transmission is likely to be facilitated by animal farming activities (3). However, given that this is a permanent context, the majority of the group considered this outbreak as sustained transmission with the associated risks.
…There is evidence of zoonotic transmission (human cases acquired from animals). There is likely to be under-ascertainment of mild zoonotic cases.
..Overall, there is no evidence of change in HA which is suggestive of human adaptation through these acquired mutations. Although genomic surveillance data are likely to lag behind infections, the lack of evidence of viral adaptation to α2,6SA receptors after thousands of dairy cattle infected may suggest that transmission within cows does not strongly predispose to human receptor adaptation. Evidence of which sialic acid receptors are present in cows, which is needed to support this hypothesis, is still preliminary and requires confirmation.
Markets in Everything: Fentanyl Precursors
Reuters: To learn how this global industry works, reporters made multiple buys of precursors over the past year. Though a few of the sales proved to be scams, the journalists succeeded in buying 12 chemicals that could be used to make fentanyl, according to independent chemists consulted by Reuters. Most of the goods arrived as seamlessly as any other mail-order package. The team also procured secondary ingredients used to process the essential precursors, as well as basic equipment – giving it everything needed to produce fentanyl.
The core precursors Reuters bought would have yielded enough fentanyl powder to make at least 3 million tablets, with a potential street value of $3 million – a conservative estimate based on prices cited by U.S. law enforcement agencies in published reports over the past six months.
The total cost of the chemicals and equipment Reuters purchased, paid mainly in Bitcoin: $3,607.18.
I don’t doubt that Reuters did what they say they did. I have trouble believing, however, that the implied profit margins are so high. A gram of cocaine costs about $160 on the street and $13 to $70 trafficked into the US and ready to sell. Thus, the street price to production cost is at most 12:1 and perhaps as low as 2.3:1. Note that this profit margin includes the costs of jail etc. I think Reuters overestimates fentanyl street prices by a factor of 2 which would still give a ratio of 415:1 which is way too high. Let’s say fentanyl sells for $1.5 million on the street then to get the ratio to a very generous 20:1 we need costs of $75,000 so my guess is that Reuters has underestimated costs by a significant amount in some manner.
Happy to receive clarification or verification from those with more expertise in the business.
I do accept Reuters point that fentanyl is cheap and easy to produce.
The whole story is excellent.
Cuba Libre! Part 2
In April I posted, following an excellent piece by Martin Gurri, that 4% of Cuba’s population had recently escaped. The Miami Herald now reports, based on official Cuban data, that 4% was a large underestimate.
A stunning 10% of Cuba’s population — more than a million people — left the island between 2022 and 2023, the head of the country’s national statistics office said during a National Assembly session Friday, the largest migration wave in Cuban history.
…It was a somber moment that capped a week of National Assembly sessions in which government officials shared data revealing the extent of the economic crisis and the failure of current government policies meant to increase production, address widespread shortages, deal with crumbling infrastructure and tame inflation.
Most seriously food production has collapsed:
Alexis Rodríguez Pérez, a senior official at the Ministry of Agriculture, said the country produced 15,200 tons of beef in the first six months of this year. As a comparison, Cuba produced 172,300 tons of beef in 2022, already down 40% from 289,100 in 1989.
Pork production fared even worse. The country produced barely 3,800 tons in the first six months of this year, compared to 149,000 tons in all of 2018. Almost every other sector reported losses and failed production goals.
And yet
…Cuban Prime Minister Manuel Marrero announced several new restrictions on the island’s private sector (!!!)
Raul Castro is 93. I am betting that his death or something similar will signal a new revolution. Is the US prepared for an open Cuba?
El Salvador bleg
Santa Ana, and also San Salvador — what do you all recommend? I thank you all in advance for the sage counsel.
The economics of GLP-1
From Frank Fuhrig:
Lean protein “emerged as the biggest winner” on supermarket shelves among shoppers who have taken popular new weight-loss drugs, according to a report using consumer surveys.
Data analytics firm Grocery Doppio’s “State of Digital Grocery Performance Scorecard: H1 2024” found reduced grocery spending among 97% of consumers who had taken GLP-1 medications — glucagon-like peptide-1 receptor agonists, including semaglutide drugs Ozempic, Rybelsus and Wegovy, prescribed for diabetes or obesity.
Their grocery bills were down by an average of 11%, yet they spent 27% more on lean proteins from lean meat, eggs and seafood. Other gainers were meal replacements (19%), healthy snacks (17%), whole fruits and vegetables (13%) and sports and energy drinks (7%).
Snacks and soda took the brunt of reduced spending by consumers after GLP-1 treatment: snacks and confectionary (-52%), prepared baked goods (-47%), soda/sugary beverages (-28%), alcoholic beverages (-17%) and processed food (-13%).
In an accompanying survey of U.S. grocery executives, 77% said they would respond to the trend among users of the fast-spreading medications by expanding and deepening assortments including more portion-control sizing and packaging. Another 71% said they would increase digital marketing efforts on health and “food as medicine.”
Past diet trends such as low-carb keto plans have also favored lean protein. A Rabobank research report in March examined the dietary benefits of a greater focus on lean protein and suggested that industry could reformulate ultra-processed foods to raise protein and combat obesity.
Despite the rapid adoption of GLP-1 drugs, grocery sales in January to June 2024 hit $458 billion, up 3.8% compared to the first half of last year, the report showed.
Here is the gated link, via J. I wonder if the behavior of the later adopters will be any different. There is, after all, an alternative equilibrium where people simply eat a lot more ice cream, knowing they can do so and still lose weight.
How to feed the Olympics, a problem in procurement
It’s a daunting task to feed 15,000 people no matter what, but if food is fuel, the chefs feeding the athletes at Olympic Village are somewhat responsible for how these athletes perform. Events management and catering group Sodexo Live takes that responsibility seriously. What results is an incredible feat of logistics, combining sustainable sourcing, diversity of options, and ensuring all athlete’s nutritional needs are met by some combination of the 500 dishes that will be served.
But it’s not just baseline nutritional needs that need to be met — athletes are coming from all over the world, with their own culinary traditions. The Olympics are supposed to be a place of cultural exchange, and this extends to the food. Sodexo Live has brought on partner chefs Amandine Chaignot, Akrame Benallal, and Alexandra Mazzia to serve dishes like quinoa muesli, chickpea pommade, and gnocchi in chicken sauce to showcase modern French cuisine. Other chefs on the team are charged with creating everything athletes will need to eat, both before and after the competition.
And:
One of the funny parts that we’ve learned is that we think they’re all athletes and in their physical prime, so distance doesn’t matter. But actually it does, because our dining hall is extremely large, it’s over 220 meters long and 24 meters wide. Walking from one side to the other takes five minutes. And these competitors, they’re not going to go that far, they’re going to really ensure the minimum steps so they don’t spend too much energy. Nobody expected that.
And:
Bananas are an athlete’s favorite thing. We anticipate getting two or three million bananas. At peak time there will be 15,000 people living in one place. So that means per day, at peak time, we’re going to go up to 40,000 meals. At the end of the entire journey, it’s over 1.2 million meals. I was working on quantifying the volume of coffee, how to produce it. And then someone said, “Can we get the coffee grinds back to us to use as a fertilizer?” So what’s the volume of grinds we’ll produce? I’’s 20 tons of coffee, so that means it’ll be 40 tons of coffee residue. But all of this is going to be used to grow mushrooms.
Finally:
Americans have been extremely vocal about what they want. They were more picky and sensitive about having a lot of gluten-free items, and a more vegetable-based diet.
The piece and interview is by Jaya Saxena, the reproduced answers are from Estelle Lamont. Here is the entire piece, via the ever-excellent The Browser.
My excellent Conversation with Brian Winter
Here is the video, audio, and transcript. Here is the episode summary:
It’s not just the churrasco that made him fall in love with Brazil. Brian Winter has been studying and writing about Latin America for over 20 years. He’s been tracking the struggles and triumphs of the region as it’s dealt with decades of coups, violence, and shifting economics. His work offers a nuanced perspective on Latin America’s persistent challenges and remarkable resilience.
Together Brian and Tyler discuss the politics and economics of nearly every country from the equator down. They cover the future of migration into Brazil, what it’s doing right in agriculture, the cultural shift in race politics, crime in Rio and São Paulo, the effectiveness and future consequences of Bukele’s police state in El Salvador, the economic growth of Colombia despite continued violence, the prevalence of startups and psychoanalysis in Argentina, Uruguay’s reduction in poverty levels, the beautiful ugliness of Sao Paulo, where Brian will explore next, and more.
And here is one excerpt;
COWEN: What’s the economic geography of Brazil going to look like? All the wealth near Mato Grosso and the north just very, very poor? Or the north empties out? How’s that going to work? There used to be some modest degree of balance.
WINTER: That’s true. Most of the population in Brazil and the economic center, for sure, was in the southeast. That means, really, São Paulo state, which is about a quarter of Brazil’s population but roughly a third of its GDP. Rio as well, and the state of Minas Gerais, which has a name that tells its history. That means “general mines” in Portuguese. That’s the area where a lot of the gold came out of in the 18th and 19th centuries. That’s gone now, so it’s not as much of an economic pull.
You’re right, Tyler, though, that a lot of the real boom right now, the action, is in places like Mato Grosso, which is in the region of Brazil called the Central West. That’s soy country. I’m from Texas, and Mato Grosso is virtually indistinguishable from Texas these days. It’s hot. It’s flat. The crop, like I said, is soy. There’s cattle ranching as well.
Even the music — Brazil, as others have noted, has gone from being the country of bossa nova and the samba in the 1970s to being the country of sertanejo today. Sertanejo is a Brazilian cousin of country music with accordions, but it’s sung by people — men mostly — in jeans, big belt buckles, and cowboy hats. They’re importing that — not only that economic model but that lifestyle as well.
COWEN: What is the great Brazilian music of today? MPB is dead, right? So, what should someone listen to?
Recommended, interesting throughout.
Agricultural Productivity in Africa
If you look at total output, Peter Coy notes that sub-Saharan Africa looks quite impressive with gains in total output exceeding that in the rest of the world.
But almost all of this has come from using more inputs, especially land. If you look at output per unit of input, i.e. total factor productivity (TFP) then sub-Saharan Africa not only trails the rest of the world, it’s falling behind.
Things get much worse if you look at agricultural productivity by country. Alice Evans points us to “the most important graph” from work by Suri et al. (2024) which shows shockingly that since ~2010 agricultural productivity has plummeted in many African nations. I found this graph hard to believe.
The numbers are correct based on data from the USDA but digging deeper, I noted that the two worst performing countries are Djibouti and Botswana–two small countries where agriculture is less than 5% of GDP and where climate and land mean that agriculture has no hope of ever being a great success. Moreover, Djibouti is growing rapidly and Botswana is a middle-income country with a booming economy. I suspect that what is going on here is that a growing economy is pulling the best (unmeasured) people and resources out of agriculture which leads what was already a small sector to become less productive on paper, albeit at no great loss to the economy.
In contrast, the countries where Ag TFP is rising the most are Zimbabwe and Senegal where agriculture is a much larger share of GDP and employment (Zimbabwe ~11-14% of GDP, 70% of employment and Senegal 16% of GDP, 30% of employment). So the good news is that agricultural productivity is growing in places where it is important.
Bottom line is that agricultural productivity in Africa is low. I see the primary cause as being small firms which means there are few opportunities for economies of scale, mechanization and R&D (see Suri et al. (2024) for a longer discussion.). Climate change is a threat and developing climate-resistant crops, especially for Africa where heat stress will become increasingly important, has high potential returns.
Overall, however, my conclusion is that although agricultural productivity in Africa is low and there are threats on the horizon the situation is getting modestly better rather than dramatically worse.
With immigration, perceptions matter more than reality
That is the topic of my latest Bloomberg column. Rather than work through the argument, which requires you to read the whole column, I’ll just reproduce the most trollish part:
When I am in a foreign city and in search of interesting food, I have a trick: In which neighborhood, I ask the locals, am I most likely to get murdered? In Stockholm, Rinkeby was the answer, even though many of the people I asked had never been.
So I went to Rinkeby, which is mostly non-White and most notably Somalian. There were Yemeni, Ethiopian, Persian and other restaurants. (I had a good chicken mandi at one called Maida.) I felt safe the entire time, and saw plenty of solo women, including some blonde Swedes, walking leisurely along the main street, as well as many women with head coverings. I saw a Western Union office and a driving school, signs that people have some funds to send away or invest in a car.
I hope to write a longer post on immigration for you all soon.